Build Your Credit Record as a Young Adult

When you’re just starting out, you have a clean financial slate, which can be good and bad -- good because you haven’t had time to screw up but bad because lenders can’t predict whether you will. Paying student loans and being an authorized user on a parent’s credit card will help build your credit record, but they likely are not enough for you to get your own credit card or car loan.

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Try applying for a credit card through your bank or credit union or from a retailer. An American Express card may be within reach because Amex considers income and assets, among other criteria. The Blue Card offers 0% interest for 12 months and no annual fee.

Or apply for a secured credit card. You typically deposit a sum that becomes your credit limit; after a year of on-time payments, you can usually qualify for an unsecured card. We like the Capital One Secured MasterCard, which has a $29 annual fee; a $49 deposit gets you a $200 credit limit.

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If a bank turns you down for a car loan, hit the dealer’s lot. Dealers often have looser lending standards (after all, they want to sell you a car). Nissan and Hyundai, in particular, are known for being liberal in extending credit.

This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.

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